US embassy cable - 04RANGOON1462

C O N F I D E N T I A L SECTION 01 OF 03 RANGOON 001462 
 
SIPDIS 
 
STATE FOR EAP/BCLTV; PACOM FOR FPA 
 
E.O. 12958: DECL: 11/11/2014 
TAGS: PGOV, PINR, ECON, BM 
SUBJECT: THE BURMESE REGIME AIRS ITS DIRTY LAUNDRY: FORMER 
PM "CORRUPT AND INSUBORDINATE" 
 
REF: A. RANGOON 1437 
 
     B. RANGOON 1402 
     C. RANGOON 1382 AND PREVIOUS 
     D. RANGOON 1345 
     E. RANGOON 1237 
 
Classified By: CDA, a.i. Ronald McMullen for Reasons 1.4 (b,d) 
 
1. (C) Summary:  In an apparent campaign to smear former 
Prime Minister General Khin Nyunt and in the process diminish 
the authority of the military intelligence (MI) apparatus 
that he created and controlled, the SPDC on November 7 
published a stunning "explanation" of his recent ouster. 
Gone is an initial regime veneer that subscribed "health 
reasons" behind Khin Nyunt's departure, replaced by a 
vitriolic attack describing the junta's former third-ranking 
member as "culpable," "corrupt," and "insubordinate." 
 
2. (C) Rather than corruption, however, we suspect that a 
more probable explanation for the SPDC's anti-Khin Nyunt 
campaign is a long-standing hatred, and fear, associated with 
an MI apparatus that knew no limits and focused attention not 
only on overt threats to the status quo, but also on the 
regime itself.  Nonetheless, although MI was clearly an 
irritant to many senior officials, the intelligence network 
more often than not delivered the goods and served as the 
regime's backbone for command and control of Burma's diverse 
population.  We suspect that MI will survive, in some shape 
or form, to continue playing a key role for the SPDC.  End 
Summary. 
 
Sunday - Laundry Day for the Regime 
----------------------------------- 
 
3. (U) In a stunning 18-page expose, the SPDC on Sunday 
November 7 issued a self-described "complete explanation" of 
events related to the October 19 ouster of former Prime 
Minister Khin Nyunt.  The "explanation," issued as a special 
insert to the regime's official newspaper (the New Light of 
Myanmar), was a compilation of internal briefings offered to 
government and military officials in late October and early 
November.  According to the regime, the briefings were given 
by SPDC member General Thura Shwe Mann, Prime Minister Lt Gen 
Soe Win, and Secretary-1 Lt Gen Thein Sein and issued 
publicly "with a view to hav(ing) the complete story 
regarding the developments in the country." 
 
4. (C) On several occasions since SPDC Chairman Than Shwe's 
declaration that he had permitted Khin Nyunt "to retire on 
health grounds," GOB and SPDC officials have alluded to 
allegations of corruption as a possible reason for the former 
Prime Minister's demise.  Most notably, on October 21 during 
a briefing for the diplomatic corps, Foreign Minister U Nyan 
Win linked Khin Nyunt to a $30 million corruption scheme (ref 
C).  During a private meeting with the COM on October 25, the 
Minister of Labor (ref B) said that Khin Nyunt was "covered 
with rust" and should have been dismissed earlier (Note: The 
Labor Minister, who had close ties to Khin Nyunt, was himself 
sacked less than two weeks later - ref A.  End Note). 
 
5. (U) The SPDC's November 7 official explanation of events 
dropped all pretext of medical reasons for Khin Nyunt's 
departure, saying that such a description was initially 
offered "out of regard for his dignity and that of his 
family."  Instead, the briefers, led by General Shwe Mann, 
unleashed a volley of accusations describing General Khin 
Nyunt as "culpable," "insubordinate," and deeply involved in 
bribery and corruption.  Among the highlights of Shwe Mann's 
briefings: 
 
--While Khin Nyunt was undergoing medical treatment in 
Singapore in mid-September, a "huge and alarming bribery and 
corruption case" was uncovered at a border checkpoint near 
Muse, close to the China border in northern Shan State (ref 
D), involving over $30 million in cash, 42 tons of jade, and 
1,300 pearls.  According to Shwe Mann, a "dutiful citizen" 
had issued a report on the corruption to Khin Nyunt, but the 
latter neglected to inform SPDC authorities. 
 
--Thus far, the regime has arrested and convicted 186 
personnel from the military and three civil departments for 
their involvement in the Muse case and disbanded the National 
Intelligence Board (which, under Khin Nyunt's authority, had 
oversight of military intelligence). 
--The Muse case, which exacerbated existing tensions between 
military intelligence units and immigration units, also 
revealed that MI (under Khin Nyunt's command) had been 
"high-handed" in its dealings with ordinary citizens and 
civil servants. 
 
--On October 1, Army Chief Vice Senior General issued a 
directive to all government and military departments to cease 
economic ventures disguised as "welfare" activities raising 
funds for civil servants.  General Khin Nyunt was "deeply 
aggrieved" by the directive, which resulted in SPDC Chairman 
Than Shwe warning him on October 4 that he, the Chairman, 
planned to relieve the Prime Minister of his MI portfolio. 
 
--On October 14, Khin Nyunt told his OCMI lieutenants that 
the situation had devolved due to a "lack of unity" among 
military units, and he issued instructions for intelligence 
gathering on regional and brigade military commanders. 
 
--Citing Khin Nyunt's October 14 instructions as "not only 
leading to the disintegration of the Tatmadaw (Armed Forces) 
but also posing a serious threat to the nation," Shwe Mann's 
briefings concluded that the former Prime Minister was 
permitted to retire on October 19. 
 
Extortion?  We're Shocked, Just Shocked 
--------------------------------------- 
 
6. (U) The SPDC's explanations also revealed that Shwe Mann 
and Prime Minister Soe Win had met with business leaders 
subsequent to Khin Nyunt's dismissal to "give necessary 
instructions."   Soe Winn, explaining that the regime's 
economic development successes were not achieved solely under 
the direction of one individual (e.g., Khin Nyunt), 
admonished the entrepreneurs to avoid creating a "new class 
that benefits... a minority of the people" and to steer clear 
of corruption and bribery.  (Note: S-1 Lt Gen Thein Sein, in 
his capacity as Chairman of the National Convention Convening 
Commission, also explained that the regime's road map was not 
the product of "a single individual," but rather the entire 
SPDC.  End Note.) 
 
7. (U) General Shwe Mann told the business leaders, 
apparently with a straight face, that "we come to know only 
now" that military intelligence officers had employed 
strong-arm tactics with the commercial sector, noting that 
"if they (MI commanders) need money, all they need to do is 
to summon the entrepreneurs and interrogate them."  Shwe Mann 
assured the business leaders that the SPDC had placed MI "in 
its bounds" in order to prevent further corrupt practices. 
 
8. (U) However, Shwe Mann also gave a clear warning to 
operators who may have had business deals with Khin Nyunt, 
his family, and/or his cronies, urging entrepreneurs to write 
as soon as possible to the new chief of military 
intelligence, Maj Gen Myint Swe, and confess their past 
"donations" to MI officers and avoid "unnecessary 
interrogations."  He added, "if, on the other hand (your 
deals are) revealed upon interrogation, you will be held 
responsible."  He observed that interrogations had already 
exposed information on joint ventures between OCMI (Khin 
Nyunt's Office of the Chief of Military Intelligence) and the 
"Tun Lin Yaung Company," but offered no further details. 
 
Comment: MI Down, but Not Out for the Count 
------------------------------------------- 
 
9. (C) A mere two days elapsed before the SPDC began to 
remove its thin veneer of a dignified departure for Khin 
Nyunt and to blame the former Prime Minister for many of the 
country's ills.  The November 7 "explanations," a public 
airing of internal conflict and decision-making without 
precedence under the current regime, are a stunning admission 
that Khin Nyunt almost single-handedly split the armed forces 
and threatened to undermine the regime.  True or not, the 
SPDC has felt compelled to undertake a massive effort, 
apparently launched just prior to Khin Nyunt's actual ouster 
(ref E), to purge the military and government of his 
influence.  Authorities have cast a very wide net and in 
recent weeks hundreds upon hundreds of Khin Nyunt's family 
members, cronies, associates, and subordinates have 
disappeared--subject to dismissal, arrest, interrogation, 
detention, and/or imprisonment. 
 
10. (C)  So what is behind the vitriol suddenly directed at 
Khin Nyunt, by all accounts a teetotaler workaholic who was 
faithful to the regime cause and, by the low standards of 
dictatorial rule, relatively limited in his excesses?  There 
is no question that "resource allocation" and competition 
among various military units for economic gains were sources 
of serious friction within the Tatmadaw, and perhaps even the 
SPDC itself.  However, the regime's feigned shock at Khin 
Nyunt's corrupt practices are laughable, given the vast 
amounts of "tea money" that regularly exchange hands at all 
levels of Burmese society and the regime's own use of 
corruption to extend and maintain its authority. 
 
11. (C) A more probable explanation for the SPDC's feast upon 
the carcass of what was once a Khin Nyunt empire is the 
long-standing hatred, and fear, associated with his military 
intelligence apparatus.  MI knew no limits and, with its 
Stasi-like oversight and powers, focused attention not only 
dissenters, insurgents, and other overt threats to the status 
quo, but also on the regime itself.  Khin Nyunt's purported 
October 14 instructions for his MI officers to probe the 
SPDC's powerful regional commanders may have been the straw 
that broke the camel's back, leading to his ouster and 
providing cover for a vengeful blow directed at military 
intelligence. 
 
12. (C) The ongoing purge may be short-lived, however.  MI 
was clearly an irritant to many, but the intelligence network 
more often than not delivered the goods and served as the 
regime's backbone for command and control of Burma's diverse 
population.  The SPDC will likely, for the sake of its 
continued survival, establish some new or modified 
organization to carry out the nefarious activities of Khin 
Nyunt's MI.  End Comment. 
MCMULLEN